Six largest charities' ROI for individual giving falls 20 per cent in five years

Independent research shows the expenditure of the top charities on individual giving rose more than three times faster than income in the five years to 2014

- This article was amended on 7 August; please see final paragraph

The largest charities’ return on investment for individual giving has fallen by 20 per cent over the past five years, according to research by the fundraiser Craig Linton.

The research, which looked at the fundraising income and expenditure of six of the top fundraising charities between 2010 and 2014, shows that the average ROI for individual giving, calculated by dividing the amount raised by the amount spent, dropped from 4.3 to 3.5 over the five-year period.

Published last month on Linton’s blog, Fundraising Detective, the research shows that the six charities increased their combined expenditure on individual giving by 39 per cent between 2010 and 2014, from £75m to £104m – but that income rose by only 10 per cent, from £322m to £356m.

"This shows that costs are rising more than three-and-a-half times faster than income," says Linton, who is global fundraising adviser at Amnesty International but writes the blog in a personal capacity.

Linton says in the blog that the extra £36m these charities cumulatively spent on fundraising over the period would have entailed a huge number of extra phone calls, street fundraisers and direct mailshots.

He notes that there was particularly heavy investment in fundraising in 2013/14, with total spending by the six charities in this area increasing by £18m on the previous year, compared with a £1.5m year-on-year increase 12 months earlier.

He says that if the top 100 fundraising organisations had all increased their spending in a similar way over the past five years, this would have led to a huge amount of additional requests to a pool of donors who were not increasing their overall giving. He also believes it is unsustainable in the long run for the largest charities to have such low returns on their investment.

"We can't keep fighting for the same donors and the same pot of money," writes Linton. "The last three months has proved that. Hopefully now we have some figures to help make that argument and develop constructive answers that will strengthen our profession."

He says he wrote the blog because he was surprised at the lack of data analysis to back up some of the criticisms, solutions and arguments that had been put forward about fundraising since the death of Olive Cooke. He believed that doing his own research could offer some insight into the problems facing the sector.

- The article originally said that a total of £18m was spent by the six charities on fundraising in 2013/14, compared with £1.5m in 2011/12.